Guotai Haitong: Increasing clues of consumer confidence, technology manufacturing continues to grow.

Guotai Haitong released a research report stating that there are more signs of a prosperous consumption trend, and the growth in technology manufacturing continues. Last week (11.17-11.23), there were different performances in the mid-term economic outlook, which are worth paying attention to: 1) There are more signs of a prosperous domestic consumption trend, with improvements in tourism and long-distance travel, which may reflect the contraction in real estate and durable goods consumption. The recovery trend in service-oriented and mass consumer goods related to "eating, drinking, playing, and entertainment" is starting to emerge. 2) The emerging technology industry continues to show high prosperity, but under the short-term narrative impact of the AI bubble, the growth momentum of TMT hardware has slightly slowed down. The follow-up commercialization of AI applications is expected to be crucial. The prosperous trend in new energy lithium batteries continues, with raw material prices continuing to rise. 3) Weak demand in construction combined with overseas interest rate cut expectations led to fluctuations, causing traditional cyclic resource prices to generally remain weak. However, the decrease in international crude oil prices and increased iron ore production have led to an increase in the prosperity of oil transportation and dry bulk shipping. Downstream consumption: Tourism prosperity has significantly improved, while real estate durable goods remain under pressure. 1) Real Estate: The sales area of commercial housing in 30 major cities decreased by -25.8% year-on-year, with first-tier/second-tier/third-tier cities showing a year-on-year decrease of -49.8%/-12.6%/-22.3% respectively, and the sales area of second-hand housing in 10 major cities decreased by -13.9% year-on-year. Real estate sales continue to bottom out, with the inventory-to-sales ratio of commercial housing in 10 major cities increasing by 13.0% month-on-month; 2) Durable Goods: The overdrawn effect of durable goods consumption continues to show, with a year-on-year decline in daily retail sales of passenger cars, and a year-on-year decrease of -21.3% and -19.0% in domestic sales and exports of air conditioners respectively in October. 3) Service Consumption: The price index for tourism consumption in Hainan increased by 4.2% month-on-month, indicating a continuous improvement in tourism prosperity. The box office revenue for movies decreased by -29.4% month-on-month, mainly due to the short-term impact of Japanese films being withdrawn. Technology & Manufacturing: Marginal slowdown in technology hardware growth, as lithium battery raw materials continue to rise in price. 1) TMT Hardware: Driven by investments in AI infrastructure, the prosperity of technology hardware remains relatively strong. The Taiwanese electronics industry chain maintained a high level of prosperity in October, with companies in the storage sector showing leading revenue growth. In the latter half of November, memory prices continued to rise month-on-month but with a slightly narrower increase. In addition, China's PCB exports in October increased by 23.4% year-on-year, although the growth rate had declined. Under the narrative of the AI bubble, the growth momentum of technology hardware has slightly slowed down. 2) Infrastructure & Real Estate: Demand for construction remains at a low level, as steel prices have slightly rebounded due to a drop in blast furnace operation rates which in turn improved the supply-demand situation. Prices for glass and cement continue to remain low. 3) Manufacturing Industry: The operating rates for industries such as automobiles and chemicals have declined month-on-month, with a marginal decrease in the willingness of enterprises to recruit. The prosperity of the new energy lithium battery industry remains relatively strong, with sales of power batteries increasing by 49.9% year-on-year from January to October, and the prices of key materials such as lithium hexafluorophosphate and lithium carbonate continue to rise due to tight supply. Upstream Resources: Coal prices remain high, while industrial metal prices have fallen. 1) Coal: Coal prices have remained high due to continued supply constraints and strong demand for heating and electricity; 2) Non-ferrous metals: International metal prices have fallen month-on-month due to expectations of overseas interest rate cuts. Human and Material Flow: Long-distance travel prosperity has increased significantly, while oil transportation prices have risen sharply. 1) Passenger Transport: The demand for long-distance travel has improved significantly month-on-month, with Baidu migration index increasing by 3.8% month-on-month and 18.0% year-on-year. The aviation passenger transportation business continues to improve, with major airlines maintaining high passenger load rates and an increase in flight frequencies, possibly reflecting a recovery in public, commercial, and tourism travel demand. 2) Freight Transport: Freight logistics prosperity declined month-on-month, with a decrease of 2.2% in national highway cargo truck traffic volume and 0.3% in national railway freight volume, as well as a decrease of 6.6% and 7.9% in national postal and express collection/delivery volume respectively, continuing to decline after "Double Eleven". 3) Shipping: Bulk/dry and oil transportation prices have seen a significant increase month-on-month, mainly driven by increased production of iron ore and crude oil boosting maritime demand. Risk Warning: Uncertainty in domestic policies, trade frictions, and global geopolitical uncertainties.